The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Texas inventionINDEX Scores – Last 12 months

The Texas inventionINDEX score for March 2026 reached 1.25 percent, securing a solid A rating and signaling a clear upward trend for the first quarter of the year. This performance represents a healthy recovery from the start of 2026, where the state posted scores of 1.13 percent and 1.15 percent in January and February, respectively. By climbing back into the A range, Texas has successfully reversed the mild cooling trend seen throughout the latter half of 2025. This current score aligns closely with the performance seen in March 2021, suggesting a resilient and cyclical strength in the state’s capacity for innovation as it enters the spring season.

When examining the broader sixty-month historical context, the March 2026 score of 1.25 percent demonstrates steady performance within a highly competitive range. While the state has seen higher peaks, most notably the 1.48 percent high in August 2023 and the 1.45 percent reached in August 2022, it remains significantly above historical troughs. The index has successfully avoided the lower C-tier ratings that appeared occasionally in years past, such as the 1.04 percent recorded in October 2021. The data suggests that Texas has established a more consistent floor for its innovative output, with the frequency of A and A+ ratings increasing over the last three years compared to the more volatile 2021-2022 period.

The positive outcomes associated with a high grade such as an A are extensive and vital for the state’s economic trajectory. A strong inventionINDEX score typically indicates a flourishing environment for intellectual property development, increased patent activity, and a surge in research and development investment. These ratings serve as a beacon for venture capital and high-tech industries, signaling that the region possesses the infrastructure and talent necessary for commercial breakthroughs. By maintaining an A-range score, Texas reinforces its position as a national leader in industrial evolution, fostering an ecosystem where startups can scale and established corporations can diversify their technological portfolios.

In contrast, the implications of a lower score or a drop into the C rating category present a different set of challenges for the Commonwealth. When the index dips toward the 1.04 percent level seen in late 2021, it often reflects a period of intellectual stagnation or a lack of institutional support for emerging technologies. Such downturns can lead to a more cautious investment climate, potentially slowing the pace of modernization across key sectors like energy, aerospace, and biotechnology. Furthermore, sustained lower scores risk a migration of top-tier engineering and scientific talent to more active innovation hubs, emphasizing the need for consistent policy and resource allocation to prevent such regressions.

Discussion:

In March, the Texas inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Texas office provides R&D tax credit consulting and advisory services to Houston, San Antonio, Dallas, Austin, Fort Worth, El Paso, Arlington, Corpus Christi, Plano, Laredo, Lubbock, Garland, Irving, Amarillo, Grand Prairie, Brownsville, McKinney, Frisco, Pasadena and Mesquite.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.